Rarely ever do you find a book with such consistent reviews from all its readers. Wanting to dabble with a light financial read, most of my friends recommended Rich Dad Poor Dad to me. ‘I wish I’d read this book when I was young’ everyone said. Yet when I told some other friends that I was reading Rich Dad Poor Dad, I heard a lot of ‘it’s just another self-help book’. And I do agree that Rich Dad Poor Dad remains a self-help book at its core. However, we cannot overlook the fact that it is a self-help book giving a very unique perspective on many technical and personality issues in financial thinking.
The most striking feature of the book to me was the underlying political debate. The book shows the difference in perspectives of a highly educated and socialist Poor Dad against a tax-fleeing capitalist Rich Dad. To a younger reader, it might not come across as striking. To me, it was one of the few good arguments in favor of a conservative leadership in the USA (apart from Donald Trump’s Presidency).
The book imparts its wisdom in the form of 6 lessons, and
then some more for bonus ones which are reproduced here in their skeletal form.
To be sure, you need to read the book if you want to truly grasp their essence.
I merely present them here for you to judge if the book is for you or not.
Lesson 1: The Rich
Don’t Work for Money
Wealth is accumulated in 3 ways – (i) Earned, (ii) Expanded,
and (iii) Created. In this lesson Kiyosaki argues that the Rich seek not to
earn but to expand it. When you work for an income, you earn it. The Rich do
not believe in that. Instead they seek to make money work for them thereby
expanding it. He shares the perspective of most folks who seek to earn a higher
income by working harder getting into a trap of higher needs and thus working
further hard. It is not until you have money working for you that you can be
free of this vicious cycle.
Lesson 2: Why Teach
Financial Literacy
Kiyasaki introduces financial terms like “assets”,
“liabilities”, etc in this chapter, but with a twist. While this chapter in no
way prepares you for an accounting exam at college, it teaches you a
perspective of looking at “wealth” which is quite intuitive, even if it doesn’t
agree with the generally accepted accounting principles. To work with something
we need to understand it first. And so Kiyosaki stresses upon the need for
financial literacy. He then goes on to illustrate cash flow patterns for
different types of individuals and welcomes you to choose what kind of person
would you like to be. He also illustrates the different assets and liabilities
and their impact on individual wealth.
Lesson 3: Mind Your
Own Business
At the outset it seems like another chapter on being an
entrepreneur. But that was Chapter 1. Here Kiyosaki explains the perspective of
looking at businesses and understanding them. You need to know what you are
doing. For example, Nokia looked at itself as a phone company and failed while
Apple saw itself as a technology company, going wherever technology led it, and
often leading technology places. What would happen if Google saw itself as an
advertising company in the early 2000s? Next he explains the different kinds of
investments you can make but always remember, that it is your business and
hence your job to understand what it is.
Lesson 4: The History
of Taxes and the Power of Corporations
Kiyosaki takes us on a history lesson now slowly revealing a
very conservative outlook on money. On a personal note, it is heartening to see
the conflict between conservative-capitalism and liberal-socialism. I’d have
loved to read of a liberal-capitalism system in the book. But I don’t get to
make choices about the world in live in. Kiyosaki explains how taxes were
started in the USA and UK and how it inevitably led to the middle-class being
taxed in effect while the rich escaped. He misses out, perhaps consciously, on
the economic perspective of dealing with issues of disparity and unemployment.
But Kiyosaki isn’t interested in the Macroeconomic issues. It only tells you
one thing – shield yourself from the government and get rich!
Lesson 5: The Rich
Invent Money
Ever wondered how some people just seem to get money out of
a whim, as if it is indeed growing on tress. In this lesson Kiyosaki shares
tips and techniques on how the rich are able to invent money from scratch. The
foundation is laid in the previous chapters, i.e. of what is money. Once you
learn that money is nothing but promises and trust, it’s easy to see how it can
be invented out of sheer nothingness. The secret basically lies in 3 skills –
(i) Finding opportunities which most people will miss, (ii) Raising money, and
(iii) Organizing smart people.
Lesson 6: Work to
Learn, Don’t Work for Money
Kiyasaki emphasizes on the importance of learning,
especially learning sales. And the best way to do that is through practice.
Learning to hear the resounding “no”. Learning persistence. And learning the
perspective that only the Rich seem to know. He shares his own experience by
illustrating a conversation with a very good writer who wanted to be a
“best-selling author”. But she refused to acknowledge the difference between
“best-selling” a “best-writing”. Similarly, it is not enough to be good at what
you do. It’s important to do better things!
Kiyasaki then goes on to describe the obstacles people face
in following the above lessons. Then he tries to comment on the motivations one
needs to get started on the path. Lastly, he comes up with a bonus round of
Do’s. Action steps if everything above was too much theory and nothing
practical.
Kiyasaki ends with another parable on how to pay for a
child’s education with just $ 7,000. And then the book has some advertising on
other books and products Kiyasaki is associated with. After all, he too is looking
to make money out of this.
Yes, you may argue that this is just another self-help book
and the author is looking to be invited to another motivational talk session to
some big university. And that is true. But there are a few good self-help books
on the way. Rich Dad Poor Dad seems to be one of them. While it imparts no
traditional financial knowledge, it offers a different perspective to look at
things. And once in a while, it’s good to accept a newer perspective.
